Lec.1 Introduction to Estimation
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This document outlines a method for accurately estimating construction costs, emphasizing its integration with technology and its alignment with professional practices. Estimating serves multiple functions in construction, including bid preparation and cost control, while also facilitating project planning and decision-making. The lecture aims to equip students with knowledge of various estimating methods used across different project delivery systems in the construction industry.
Lec.1 Introduction to Estimation
- 1. Northern Technical University Engineering Technical College of Mosul Building & Construction Technology Engineering Dept. Estimation, Specifications and Contracts SECOND CLASS Lecturer: Dr. Muthanna Adil Najm ABBU 2017-2018
- 2. Estimation, Specifications & Contracts Introduction Lecture .1 1 Dr. Muthanna Adil Najm Northern Technical University Introduction: The goal of this lecture is to present a method of compiling consistently accurate construction cost estimates in a minimum of time. The method can easily be integrated with the latest technology available to obtain soaring productivity; it is a method of estimating that offers extensive review and control capabilities because it is consistent with the basic procedures followed by professional estimators and quantity surveyors in the construction industry. The method presented is intended to represent a standard or basic core that can be adopted in the many types of construction estimating used across the wide variety of construction work. Worked examples and explanations that are offered, however, will come from small building projects of minimal complexity so that the student can concentrate on the technique involved rather than spend time unraveling detail. Engineering projects & estimation: Estimates serve a number of different functions in the construction process (see Figure 1). In the early stages of a construction program, the owner needs an estimate of the probable cost of construction to assess the financial feasibility of the project. This conceptual estimate has to be prepared from a minimum amount of information because it is required at a time when the project is often little more than a vague idea in the mind of the owner. There will be few if any design details at this stage because the design process will not begin until the owner is satisfied that the cost of proceeding with it is justified. Once the design of the project is underway, budget amounts can be established for the various elements of the project using procedures for a preliminary estimate. These cost budgets are compiled in a cost plan that is a summary of all anticipated project expenditures. The budget amounts contained in the cost plan are verified from time to time during the design phase using more accurate estimating methods based on the specific design details that emerge in this phase of the project. This cost management process also includes estimating the cost of alternative designs so that informed decisions can be made on what to include in the design. When the design is completed, a final pre- bid estimate can be compiled to anticipate the contractor’s bid price for the work. If this estimate is accurate, the bid prices obtained will be within the owner’s budget for the project.
- 3. Estimation, Specifications & Contracts Introduction Lecture .1 2 Dr. Muthanna Adil Najm Northern Technical University Most contracts that transpire in the construction industry result from competing bids from contractors to supply goods and services to meet certain specifications for a stipulated sum of money. Figure 1 Role of the Estimator in the Traditional Construction Process The sum of money specified in such a bid represents the total amount that the contractor will receive for performing the work described in the contract; clearly, an accurate forecast of the cost of the work is necessary if the contractor is to profit from his or her endeavors and also be competitive. Providing this cost forecast is the prime function of the contractor’s bid estimate prepared from the drawings and specifications supplied by the owner to define the scope of the contract work.
- 4. Estimation, Specifications & Contracts Introduction Lecture .1 3 Dr. Muthanna Adil Najm Northern Technical University Estimates are also required after work starts on the project. In cost control programs, estimating is required to facilitate the control of expenditure of funds on a project. Contractors set cost targets based on their estimates of the cost of each component of the work, and then they compare the actual cost of work against these target amounts to discover where corrective action is needed to bring productivity up to required levels. Often during construction operations the owner or the designer asks the contractor to quote prices for proposed changes in the scope of work. Each of these quotes amounts to a mini- bid that involves an estimate of the full cost of the change followed by an offer to make the change for the price quoted to the owner. Definition of estimation: An estimate in its essence is an assessment of the probable total cost of some future activity. We put together estimates all the time in our everyday lives, often with little or no calculating. For example, we might say, “If I drive into town today it will cost 1000 ID to park” or “I’m going to have to come up with more than 500000 ID if I have to replace that computer.” Estimating also occurs in all industries and government agencies for two purposes that cover a variety of possibilities: To prepare budgets for future expenditures, or To try to anticipate what something will cost to implement; for example, setting up a new coffee station in the office Unlike the everyday situations, these two examples generally involve some analysis and calculation. To estimate the cost of the new coffee station, for instance, you would probably first identify what tasks have to be completed in order to get the new facility up and running. Second, you would try to measure in some way the size of these tasks, which would help you with the last step: assessing the cost of the tasks. This basic approach is exactly how we prepare an estimate for a construction project: Identify the work items that have to be completed to finish the project. Measure the size of these work items. Assess the likely cost of this work. Estimating is the technique of calculating or computing the various quantities and the expected Expenditure to be incurred on a particular work or project. In case the funds available are less than the estimated cost the work is done in part or by reducing it or specifications are altered, the following requirement are necessary for preparing an estimate. a ) Drawings like plan, elevation and sections of important points. b) Detailed specifications about workmenship & properties of materials etc.
- 5. Estimation, Specifications & Contracts Introduction Lecture .1 4 Dr. Muthanna Adil Najm Northern Technical University c) Standard schedule of rates of the current year Benefits of estimation: NEED FOR ESTIMATION AND COSTING 1. Estimate give an idea of the cost of the work and hence its feasibility can be determined i..e whether the project could be taken up with in the funds available or not. 2. Estimate gives an idea of time required for the completion of the work. 3. Estimate is required to invite the tenders and Quotations and to arange contract. 4. Estimate is also required to control the expenditure during the execution of work. 5. Estimate decides whether the proposed plan matches the funds available or not. After learning estimating , you should be able to do the following: List and briefly describe the different functions served by estimating in the construction industry. Briefly describe the cost-planning process including the role of conceptual estimates and preliminary estimates. Describe the three main project delivery systems—traditional design-bid-build, construction management, and design-build—and explain how conceptual, preliminary, and detailed estimates are used with each. Identify what type of estimating is required for lump-sum, unit-price, and costplus contracts. Outline the detailed estimating procedure. Recognize the need for knowledge of Occupational Safety and Health Administration safety standards and the impact that compliance with the standards has on construction costs. SUMMARY The intention of this lectures is to present a standard method of estimating that can be adopted for use with many different types of construction projects. Estimating serves a number of purposes in the construction process including preparation of bids and cost control.
- 6. Estimation, Specifications & Contracts Introduction Lecture .1 5 Dr. Muthanna Adil Najm Northern Technical University The role of the estimator includes preparing conceptual estimates, preliminary estimates, and pre-bid and post-bid estimates over the course of all the phases of a construction project. Conceptual estimates are used to assess the feasibility of a project by comparing the anticipated cost with the value of a proposed project. Preliminary estimates are used throughout the design stage of a project, primarily to ensure that the project budget is not exceeded. Different project delivery systems—traditional design-bid-build, construction management, and design-build—make use of conceptual, preliminary, and detailed estimates at various stages during the course of a project. Although firm-price lump-sum contracts are used on most construction projects, owners may adopt a cost-plus alternative when the scope of work is difficult to define or when there is insufficient time to prepare complete design documents before work begins. Detailed estimates may still be required with a cost-plus contract in which a guaranteed maximum price is involved. Unit-price contracts call for a breakdown of the work and a separate unit price for each item on the breakdown.